Trader Joe's-style discount market 'Ehad' to debut in Israel

Based on the German chain Aldi, which owns US chain Trader Joe’s, the market will freeze out big food manufacturers, opting for alternative manufacturers and store-branded items.

January 19, 2015 19:25
3 minute read.
raanana supermarket

Discount food market chain "Ehad" in Ra'anana. (photo credit: COURTESY/RON KAMCHI)

Call it Trader Yosef, if you like.

The first branch of a new discount food market chain called “Ehad” (one) will open its doors in Ra’anana Wednesday, promising to sell nonbrand products at a fraction of the price currently available in Israel.

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Based on the German chain Aldi, which owns US chain Trader Joe’s, the market will freeze out the big food manufacturers and their brandname items, opting for alternative manufacturers and store-branded items.

“Tnuva or Strauss have the power to create cheap products, but that seems to not be the way,” founder Eari Shahar said of Israel’s large food suppliers.

In theory, big companies should be able to produce products more cheaply because of their size, but in reality, he said, they use their market power to raise prices.

“The strength of the suppliers is immense and they can continue to raise the prices on Milky and cottage cheese, and you’ll pay it because you’re not that price sensitive and you don’t have alternatives,” he said.

The store will offer “everyday low prices,” meaning the prices will stay consistent throughout the year and not be subject to sales or discounts, which are already meant to be built in.

“There’s no need to move to Berlin. We’ve brought Berlin here,” Shahar said.

Ehad is reaching out to smaller manufacturers who are not able to get shelf space in major chains, and offering them an exclusive place on its shelves, where competing products will not be sold.

“Ehad has chosen the right product for giving the consumer the best value for their money in every category. At Ehad, there are not different manufacturers for the same category so the network does not create the illusion of variety and simulated competition,” a press release for the store said.

The store already has lined up its own cottage cheese, spreadable “ski” white cheese and tuna, and is working on finding options for hard white cheese, instant coffee and Milky-style pudding snacks, though it said it hasn’t found a good enough quality-for-value proposition yet.

The store will strive to eventually carry 20-30 percent of its products exclusively.

After Wednesday’s Ra’anana opening, Shahar plans to open a Netanya branch in March and two more branches, including one in Petah Tikva, by the end of the year.

Food prices have been a major source of difficulty for Israelis in recent years. The 2011 summer social protests were sparked by the high price of cottage cheese. More recently, a viral Facebook post comparing Milky with a similar, much cheaper pudding product in Berlin went viral.

“The increase in food prices in Israel in the last 10 years has been amazing. A 20% real growth in prices, which has only been 2-3.5% in most Western countries. So something is happening in Israel that really gave me the essence of establishing this concept in Israel,” said Shahar, a former CEO of the Fishman group.

According to the Bank of Israel, food prices have risen 39% since 2003.

Though the social protests were what nudged Shahar toward opening his own Aldistyle store, he says he’s been a fan of the store since he was a child when his father, an El Al pilot, regularly brought home its products.

While Ehad hopes to disrupt the highly-concentrated food market, it may be in for some interesting competition of its own.

Cofix, the NIS 5 coffee- booth chain, plans to open the first of 20 “Super Cofix” markets in April. Like its cafe counterpart, it will sell items at a flat rate of NIS 5.

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